Casco Bay High School College Financial Planning Steps for Juniors and Seniors January Bill Smith

Transcription

1 Casco Bay High School College Financial Planning Steps for Juniors and Seniors January 2016 Bill Smith

2 Agenda File aid forms: FAFSA, Profile if needed Focus on net price Seniors: Get ready for award letters Juniors: Be sure list includes affordable colleges Questions

3 Gift Aid Need / Merit COA EFC = Need = Eligibility, not aid EFC is an index to rank families relative economic resources Merit based on GPA, test scores, class rank Highest merit awards go to strongest students relative to the school s other applicants College aid policies vary Some meet full need with gift aid, minimal merit Others rely on merit extensively, less generous need

4 Applying for Need-based Aid FAFSA required for need-based aid & Federal education loans at all colleges: Profile required for college-funded aid at about 300 colleges: Both parent(s) and student need to sign FAFSA using their own FSA ID: Import tax information from IRS using DRT (Data Retrieval Tool)

5 EFC: Determines Need-aid Eligibility Two EFC formulas FAFSA & Profile but same basic approach Income Assets Parent(s) Parent Contribution from Income (AGI + untaxed) 47% max Parent Contribution from Assets 5.64% max Student Student Contribution from Income (AGI + untaxed) 50% Student Contribution from Assets 20-25% Parent Contribution Student Contribution PC + SC = EFC

6 Income Included on FAFSA/Profile Add: Taxable Income Add: Untaxed Income Less: Exclusions Less: Allowances Equals: Available Income FAFSA AGI, Income from work (W2) Retirement contributions, Child support received, VA benefits, Workers comp, Disability Child support paid, Combat pay Taxes paid, Minimal living costs Assessed at 22-47%, Highest rate at about $32K Profile AGI, Income from work (W2) FAFSA items plus: TANF, Untaxed social security, EIC, Business loss & depreciation, Flexible spending accounts Same as FAFSA FAFSA items plus: Medical expenses, Tuition for pre-college siblings Assessed similar to FAFSA but highest rate at higher income

7 Assets Included on FAFSA/Profile Assets Counted Less: Allowances Equals: Available Assets Assets NOT Counted Notes FAFSA Cash & investments, Real estate except main home, Business if over 100 employees, Trusts, 529 plans Modest savings allowance Assessed at 12% of income assessment rate; maximum is 5.64% Personal property, Qualified retirement savings, Life insurance Student-owned 529s count as parent asset Profile FAFSA items plus: Businesses less than 100 employees, Home equity (value less debt), Assets in siblings' names Similar to FAFSA, modest allowance Similar to FAFSA Same as FAFSA Student-owned 529s usually count as parent asset, Asset values may be imputed

8 Student Income & Assets Income Assets Notes FAFSA All parent income items plus gifts and bills paid on student's behalf, after $6,400 allowance assessed at 50% All parent asset items except student-owned 529s (which count as parent asset), assessed at 20% Profile Same income items as FAFSA, assessed at parent(s)' marginal assessment rate All parent asset items except student-owned 529s (which usually count as parent asset), assessed at 25% Most colleges have minimum "summer earnings expectation" of about $2,000

9 Important FAFSA Factors Household size: Student, parent(s), other children and others if parents pay more than 50% expenses Multiple siblings in college: PC shared among siblings Special circumstances explain to each college: loss of job, high medical expenses, death of parent Divorced/separated parents: FAFSA: custodial parent only, plus parent s spouse Profile looks at both biological/adoptive parents and each one s spouse if applicable

10 4-Year FAFSA Dates Juniors For juniors who will graduate in June 2017 Most people file taxes months before FAFSA, so importing tax data will be easy Year in College Base income year for FAFSA Student's status during income year Data from IRS becomes available FAFSA becomes available Asset value date for FAFSA 1st year of college begins fall Spring grade 10 & Fall grade 11 Soon after filing, deadline Apr 15, 2016 October 1, 2016 Filing date, eg Oct nd year of college begins fall Spring grade 11 & Fall grade 12 Soon after filing, deadline Apr 15, 2017 October 1, 2017 Filing date, eg Oct rd year of college begins fall Spring grade 12 & Fall freshman year Soon after filing, deadline Apr 15, 2018 October 1, 2018 Filing date, eg Oct th year of college begins fall Spring freshman year & Fall sophomore year Soon after filing, deadline Apr 15, 2019 October 1, 2019 Filing date, eg Oct 2019 Profile uses same base year as FAFSA but asks about other years too

11 4-Year FAFSA Dates Seniors For seniors graduating in June 2016 Base year for first & second years of college will be 2015 Year in College Base income year for FAFSA Student's status during income year Data from IRS becomes available FAFSA becomes available Asset value date for FAFSA 1st year of college begins fall Spring grade 11 & Fall grade 12 Approximately Feb 7, 2016 or later January 1, 2016 Filing date, eg Jan nd year of college begins fall Spring grade 11 & Fall grade 12 Soon after filing, deadline Apr 15, 2016 October 1, 2016 Filing date, eg Oct rd year of college begins fall Spring grade 12 & Fall freshman year Soon after filing, deadline Apr 15, 2017 October 1, 2017 Filing date, eg Oct th year of college begins fall Spring freshman year & Fall sophomore year Soon after filing, deadline Apr 15, 2018 October 1, 2018 Filing date, eg Oct 2018 After second year of college the base year will advance each year Bottom line for seniors: file first-year FAFSA now (Jan 2016), file second year FAFSA 9 months later (Oct 2016), then annually

12 Your Real Cost the Net Price It doesn t matter what colleges charge Sticker price (published Cost of Attendance) What matters is what you pay The Net Price Net Price = COA minus gift aid: Grants & Scholarships

13 Types of Financial Aid Grants & Scholarships Free Money Work/Study Earned as you go Loans Must be repaid with interest Gift aid grants & scholarships reduces cost Self-help work/study & loans manages cost

14 How to Analyze College Costs Cost of Attendance Less: Gift Aid Equals Net Price Pay Net Price using: Savings Earnings during college Loans The analysis is the same for juniors, seniors, everyone The difference: Juniors (and younger) estimate net price using Net Price Calculators Seniors compare actual aid (price) offers on award letters You students and families are in the driver s seat. You decide: 1. Is the college affordable 2. How much savings and earnings 3. How much to borrow

15 Problems with Award Letters They often don t tell you what it costs! Too much information Details are important, but timing s not right Costs & awards not shown together Distinguishing gift aid, loans, work Loaded with financial aid jargon

16 Award Letter Example

17 Interpreting Award Letter G G G L L G W What s missing? - The list price - Your real cost (net price) - How much the award doesn t cover Gift Aid $14,900 Loans $ 5,500 Work/Study $ 1,800

18 Finding Missing Information Use College Navigator Enter name of college Go to Tuition, Fees, Student Expenses

19 Figure the Net Price Use appropriate costs from College Navigator based on living arrangement (on-campus, off-campus, with family) this example assumes on-campus Combine with gift aid from award letter ($14,900) to estimate net price Tuition & Fees $32,375 Room & Board $14,100 Books & Supplies $700 Transportation & Other $2,590 Cost of Attendance $49,765 less: Gift Aid $14,900 Net Price $34,865

20 Net Price Calculators NPCs tell your personalized Cost of Attendance ( sticker price before financial aid), Gift Aid, and the Net Price All colleges must have an NPC, but not all are reliable Good & bad NPCs more questions means more reliable Find any NPC:

21 Net Price is COA (Cost of Attendance) minus Gift Aid COA is: Tuition & Fees Room & Board Books & Supplies Transportation & Other

22 Net Price Profile Hampden-Sydney Hampden-Sydney COA: $58K A to A A- to A 1300 B to B B- to B 1100 C <=1000 EFC: 65K Merit: $29K Net Price: $29K Merit: $24K Net Price: $34K Net Price: $39K Merit: $14K Net Price: $44K Merit: $9K Net Price: $49K EFC: 40K Merit: $29K Net Price: $29K Merit: $24K Net Price: $34K Net Price: $39K Merit: $14K Need: $3.3K Net Price: $41K Merit: $9K Need: $4.5K Net Price: $45K EFC: 25K Merit: $29K Need: $4.3K Net Price: $25K Merit: $24K Need: $4.5K Net Price: $30K Need: $8.4K Net Price: $31K Merit: $14K Need: $12.9K Net Price: $31K Merit: $9K Need: $14.8K Net Price: $34K EFC: 15K Merit: $29K Need: $4.5K Net Price: $25K Merit: $24K Need: $6K Net Price: $28K Need: $9K Net Price: $30K Merit: $14K Need: $13K Net Price: $31K Merit: $9K Need: $14.8K Net Price: $34K EFC: 7.5K Merit: $29K Need: $4.5K Net Price: $25K Merit: $24K Need: $6K Net Price: $28K Need: $9K Net Price: $30K Merit: $14K Need: $13K Net Price: $31K Merit: $9K Need: $14.8K Net Price: $34K EFC: 2.5K Merit: $29K Need: $7.61K Net Price: $22K Merit: $24K Need: $9.1K Net Price: $25K Need: $12.1K Net Price: $27K Merit: $14K Need: $16.1K Net Price: $28K Merit: $9K Need: $17.9K Net Price: $31K Hampden-Sydney Need policy Merit policy Mid 50% SAT Admission probability profile Grid estimates: Moderate Extensive Strong Possible Unlikely Merit aid, Need aid, Net price

23 Net Price Profile - Wheelock Wheelock COA: $51K A to A A- to A 1300 B to B B- to B 1100 C <=1000 EFC: 65K Net Price: $32K Net Price: $32K Net Price: $32K Net Price: $32K Merit: $15K Net Price: $36K EFC: 40K Net Price: $32K Net Price: $32K Net Price: $32K Net Price: $32K Merit: $15K Net Price: $36K EFC: 25K Need: $2K Net Price: $30K Need: $2K Net Price: $30K Need: $2K Net Price: $30K Need: $2K Net Price: $30K Merit: $15K Need: $2K Net Price: $34K EFC: 15K Need: $3K Net Price: $29K Need: $3K Net Price: $29K Need: $3K Net Price: $29K Need: $3K Net Price: $29K Merit: $15K Need: $3K Net Price: $33K EFC: 7.5K Need: $4K Net Price: $28K Need: $4K Net Price: $28K Need: $4K Net Price: $28K Need: $4K Net Price: $28K Merit: $15K Need: $6K Net Price: $30K EFC: 2.5K Need: $8.1K Net Price: $24K Need: $8.1K Net Price: $24K Need: $8.1K Net Price: $24K Need: $8.1K Net Price: $24K Merit: $15K Need: $10.1K Net Price: $26K Wheelock Need policy Merit policy Mid 50% SAT Admission probability profile Grid estimates: Moderate Extensive Strong Possible Unlikely Merit aid, Need aid, Net price

24 Net Price Profile - Bowdoin Bowdoin COA: $63K A to A A- to A 1300 B to B B- to B 1100 C <=1000 EFC: 65K Net Price: $63K Net Price: $63K Net Price: $63K Net Price: $63K Net Price: $63K EFC: 40K Need: $21K Net Price: $42K Need: $21K Net Price: $42K Need: $21K Net Price: $42K Need: $21K Net Price: $42K Need: $21K Net Price: $42K EFC: 25K Need: $36K Net Price: $27K Need: $36K Net Price: $27K Need: $36K Net Price: $27K Need: $36K Net Price: $27K Need: $36K Net Price: $27K EFC: 15K Need: $46K Net Price: $17K Need: $46K Net Price: $17K Need: $46K Net Price: $17K Need: $46K Net Price: $17K Need: $46K Net Price: $17K EFC: 7.5K Need: $54K Net Price: $9K Need: $54K Net Price: $9K Need: $54K Net Price: $9K Need: $54K Net Price: $9K Need: $54K Net Price: $9K EFC: 2.5K Need: $58K Net Price: $6K Need: $58K Net Price: $6K Need: $58K Net Price: $6K Need: $58K Net Price: $6K Need: $58K Net Price: $6K Bowdoin Need policy Merit policy Mid 50% SAT Admission probability profile Grid estimates: Extensive None Strong Possible Unlikely Merit aid, Need aid, Net price

25 Net Price Profile - UMO UMO COA: $23K A to A A- to A 1300 B to B B- to B 1100 C <=1000 EFC: 65K Merit: $8K Net Price: $15K Merit: $8K Net Price: $15K Net Price: $19K Merit: $1K Net Price: $22K Net Price: $23K EFC: 40K Merit: $8K Net Price: $15K Merit: $8K Net Price: $15K Net Price: $19K Merit: $1K Net Price: $22K Net Price: $23K EFC: 25K Merit: $8K Net Price: $15K Merit: $8K Net Price: $15K Net Price: $19K Merit: $1K Net Price: $22K Net Price: $23K EFC: 15K Merit: $8K Net Price: $15K Merit: $8K Net Price: $15K Net Price: $19K Merit: $1K Need: $.1K Net Price: $22K Net Price: $23K EFC: 7.5K Merit: $8K Need: $1.1K Net Price: $14K Merit: $8K Need: $1.1K Net Price: $14K Need: $2.2K Net Price: $17K Merit: $1K Need: $3.2K Net Price: $19K Need: $3.4K Net Price: $20K EFC: 2.5K Merit: $8K Need: $4.1K Net Price: $11K Merit: $8K Need: $4.1K Net Price: $11K Need: $5.4K Net Price: $14K Merit: $1K Need: $6.4K Net Price: $16K Need: $6.8K Net Price: $16K UMO Need policy Merit policy Mid 50% SAT Admission probability profile Grid estimates: Limited Moderate Strong Possible Unlikely Merit aid, Need aid, Net price

26 Net Price Profile USM (commuting) USM (at home) COA: $15K A to A A- to A 1300 B to B B- to B 1100 C <=1000 EFC: 65K Net Price: $11K Net Price: $11K Merit: $2.5K Net Price: $13K Merit: $2.5K Net Price: $13K Merit: $1K Net Price: $14K EFC: 40K Net Price: $11K Net Price: $11K Merit: $2.5K Net Price: $13K Merit: $2.5K Net Price: $13K Merit: $1K Net Price: $14K EFC: 25K Net Price: $11K Net Price: $11K Merit: $2.5K Net Price: $13K Merit: $2.5K Net Price: $13K Merit: $1K Net Price: $14K EFC: 15K Net Price: $11K Net Price: $11K Merit: $2.5K Net Price: $13K Merit: $2.5K Net Price: $13K Merit: $1K Net Price: $14K EFC: 7.5K Net Price: $11K Net Price: $11K Merit: $2.5K Net Price: $13K Merit: $2.5K Net Price: $13K Merit: $1K Need: $1.4K Net Price: $13K EFC: 2.5K Need: $4.2K Net Price: $7K Need: $4.2K Net Price: $7K Merit: $2.5K Need: $4.6K Net Price: $8K Merit: $2.5K Need: $4.6K Net Price: $8K Merit: $1K Need: $7.4K Net Price: $7K USM Need policy Merit policy Mid 50% SAT Admission probability profile Grid estimates: Limited Moderate Strong Possible Unlikely Merit aid, Need aid, Net price

27 Compare Net Price Side-by-Side Seniors will receive award letters from colleges they ve been accepted at Juniors should estimate costs so they know they ll have affordable choices This example shows a student with a need-profile resulting in EFC of 15K and merit-profile based on B- to B grades and 1100 SAT (reading & math) Be sure to ask if aid is renewable remember college is more than one year! Hampden-Sydney Wheelock UMO Bowdoin USM (at home) COA: $58K Merit: $14K Need: $13K Net Price: $31K COA: $51K Need: $3K Net Price: $29K COA: $23K Merit: $1K Need: $0.1K Net Price: $22K COA: $63K Need: $46K Net Price: $17K COA: $15K Merit: $2.5K Net Price: $13K Admission probability profile Strong Possible Unlikely

28 Free Money: Up to $600 from FAME NextGen 529 accounts: extgen_new_look/grants_maine_residents.aspx $200 Initial Matching Grant (IMG) For accounts opened after 2010 for beneficiaries not previously named as beneficiary of a NextGen account or received Alfond Challenge Grant $300 NextStep Matching Grant (NMG) New deposits to any account matched at 50% up to $300 grant for $600 total deposit (excluding IMG) $100 Automated Funding Grant (AFG) One time, after 6 automatic contributions

29 Links to Resources

30 Questions?